At a price of $3 each, SHAPE magazine sells 1.25 million copies of its magazine targeted to young women seeking a healthier lifestyle. If the price is increased to $3.25 each, only 1 million copies will be sold. Fixed costs are $1 million and unit variable costs are $0.50 per magazine. For the information provided here, what is SHAPE magazine's total revenue obtained at the higher price?
A)$2,125,000
B)$1,625,000
C)$3,750,000
D)$3,250,000

Question

Quizplus · Accepted Answer

First, let's calculate SHAPE magazine's revenue at the original price of $3:

Revenue = Price x Quantity = $3 x 1.25 million = $3,750,000

Next, let's calculate SHAPE magazine's revenue at the higher price of $3.25:

Revenue = Price x Quantity = $3.25 x 1 million = $3,250,000

Therefore, SHAPE magazine's total revenue obtained at the higher price is $3,250,000 (option D).

At a Price of $3 Each, SHAPE Magazine Sells 1